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I'm not very familiar with PATS, but will look into when I have some time, seems to be working very well for you. I was just looking at some of the charts you were posting with your entries and thinking yeah, I would have entered on that type of formation too (albeit on a time based chart), but my stop/target is 1:1+ for those types of entries.
I've always been intrigued by tick/volume charts due to their ability to "see" the true price action inside the time based bars, but I have a psychological hangup from using them for my "price action" setups (I do have a setup that fades a pullback under certain conditions that tick/volume charts would be just as good for). And maybe it's a difference between how PATS entries work and my entries, which are typically stops above the high of the prior bar for a long price action entry (if all other conditions in place).
My hangup is rooted in the belief that expectancy increases the more aligned you are with what other traders and the algos are looking at. What I mean by that is there is nothing inherently special (like, in terms of universal truth) about a 20 period EMA, or a 50% retracement level, or the high or low of the prior bar, or high or low of the prior pullback level or price extension before pulling back, but I'm constantly witnessing battles being fought over these levels. Meaning volume comes in to try and defend them and/or violate them to see if more volume can be found on the other side and/or get puked back out when the level is effectively defended. To me this means other traders and the algos are conscious of them, and will change their behavior based on whether the levels get defended or effectively violated.
As that relates to tick charts, what I'm trying to say is I have a hard time placing significance in the high or low of the prior bar (which I use for as the basis for entry orders on a PA setup), when that bar is being drawn "randomly" based on how many ticks you or I choose. At least with 1 or 5 minute bars I know other traders and maybe the algos are looking at them too. It might all be in my head, but one of the things that seems to confirm that for me is the games that get played in the seconds leading up a bars close (most notably the 5 min), watching the big boys or algos try to "paint the tape" to create a trap or setup that other traders or algos will respond to at the beginning of the next bar. This is observable through a relentless one way action the last ~10 seconds of a bar to either extend or reverse the bar's formation only for that volume to disappear for the first several seconds of the next bar while everyone waits to see what will happen next. Happens over and over again particularly after the first 60 mins after the market has settled down.
I'm not saying this to try and convince that time charts are better, clearly the tick charts are working great for you, but to explain why I've traditionally had a hard time putting trust in them myself. Perhaps when I look deeper into PATS it will make more sense and/or you'll explain more why they work for you... maybe you're using breaks of micro S/R levels instead of the prior bar's high or low as entry levels in which case I could see how tick charts would let you see those levels more easily.
I can see you have spent a lot of time watching the price action!!
The only reason I've converted over to Tic charts personally is they work for me...no other reason. By stripping out the "time" element of the time based charts your getting "pure" price action only, so many times I used to watch the old 3m & 5m charts drifting away over time with no real price action. giving false signals... You can use tic based charts to trade the exact same patterns that you would normally use on your time-based charts - by essentially changing the number of tics per bar....for the ES many believe a 2000tic chart is the equivalent of a 5min chart......food for thought. Trading is such a personal journey only use what you believe in.
All the best.
Not sure why I even bothered trading today with Golden week in Asia - its very "slow"...
Slow is right! Witnessing some serious volatility collapse here after a couple wild months.
So I bought the PATs manual and read through it, was an enjoyable read since it's already well aligned with the lens through which I now see the market after many years of having that lens shaped through frustration and pain, LOL. The approach is more simple than the collection of 4 setups I currently use (it basically is 2 of my current setups, with a couple additional filters), and also provides a framework for fading failed breakouts on range days, which I don't really do today.
I genuinely appreciate the suggestion to look into it, because I can see how simplifying my approach would yield to less over trading and more consistent results. I'm also convinced I need to spend more time with tick charts to see if I can develop confidence in them. I haven't spent any time on trading forums for about 7 or so years, really glad I stumbled across your journal!
Hi Godzilla and others, great journal and have been following with interest. Good reading and well done with the progress!
I trade using Wyckoff methodolgy and am backtesting HSI (mini) currently myself and its great to hear others thoughts on how this mkt trades and its nuances. It certainly can be a wild beast.
Happy to share my observations if of interest. I'm only backtesting so obviously there are nunaces that cant be picked up but its nice to see others disucssing this mkt. Am also respectul that its you journal and if it makes sense it might be worth starting a separate thread.
Good luck on the back testing ( I know all about that game)....I'm snowed under with the kids in COVID lock-down at home and my trading is suffering at the moment so I thought about building a simple day trading model for stocks.....after getting some "inspiration" from Nick Radge and his current "Day Trade" strategy that is generating some VERY nice numbers...have a look at his website called "The Chartist". Simple models but robust.
I realise discretionary trading should outperform a model BUT the weakest link is the "trader" - whether that's because of external factors like software, family situation , environment , COVID?? etc....unless it's all "working" then it's really hard to trade - well at least in my experience...my week has been just one big distraction with the kids doing homework in my office - . Hence my HSI trading motivation is LOW with all the distractions.....so on Wednesday I started building this DT model and to cut a long story short I'm doing some investigations into the IB Basket Trader( I hate the IB TWS) as I would need to execute 40 trades (max) on the open each day for the Nasdaq100 underlyings with attached closing MOC orders - with 25% margin from IB the returns look attractive (20%+ per annum) and given that I'm expecting a lump sum withdrawal within the next 60 days from selling my property trust units I need to put the capital to work to make up for the lost dividend income. I could run the same model as my SMSF retirement account on it or split it between this short term model and the LT model...but I have to "prove" the Nasdaq executions are possible on SIM before putting real money on it.
If the Basket Trader option fails then I'll need to get a custom IB API built for around $1500 that will be robust enough to handle the orders with optional VPN hosting on a NY server if required....but thats a whole new ball game for me to get started on....I really didn't want to get back into the "back-testing" gig as I'm sick of it (see earlier history of fails) but need to keep the capital moving as the market (vs Real Estate) is looking quite attractive at the moment.
HSI trading is about as "high-touch" as you can get whilst I try to keep my stock model trading "low-touch"....fingers crossed.
Don't be shy to share your HSI back-testing results once your ready...
Kids were sent to school today and so the normal routine was back....found my motivation at the coffee shop after reading the paper as normal - logged in and ker-ching hit 4/5 - +40tics - good patience today and understood "why" I had a losing trade on review so turned it off then worked on the Day-Trading stock model...I think it's basically done and will settle on the stats below. It trades a lot so need to get a handle on IB BasketTrader next.
I've been reading through this thread with interest. Thank you for taking the time to write it up.
I'm what you might describe as a "break even" forex trader who's looking to switch to futures.
I came across the PATS method recently. I've read Mack's manual and watched a lot of his videos. I really like his "price action" style, as it's been my focus in trading forex (simpler is better).
I live in New Zealand and I'm trying to figure out if I can trade futures using the PATS method in the evening (after work) during the the Euro session. It's proving hard to figure out which futures markets (outside of the ES) might lend themselves to the "scalp and run" technique Mack teaches.
I wonder if you could offer any advice regarding this?
I would've sent this to you via PM, but I'm new to the forum and haven't yet made sufficient posts to activate my PM-sending abilities
I'm going to "make" your day and say that BreakEven in FX means you can make money in the futures market...that market is semi-rigged on price as there is no central price mechanism hence your getting ripped on both sides when you trade....I'd use IB only if I was forced to trade FX. But FX is too slow for my liking.
Anyway....given your working for the "man", leaving evenings free the Euro market makes sense and from reading other "Kiwi" posters like Steve2222 the Mdax or even the Bunds are the best choice's to get started....SIM only of course until you can double your SIM account...then go-live on a 1-lot. Once you get proficient as as day trader give DAX a go as EUR12.5 / tick means you can make $1000/day with only a few trades on a 1 lot. As you will see PATS patterns apply to all markets on TICK charts..(forget the time-based if you can)
Whichever market you choose stick to it for a minimum of 6 months as each market takes time to master and has its own idiosyncrasy's etc...once you get really good maybe even just trade those 2 markets simultaneously but that takes serious concentration. I'm burned out after 90 minutes of screen time....but then again I'm not as young as I used to be
Either way don't give up and good luck. It is possible!!
Would it be worth me looking at the mini DAX, and I also wondered whether the mini Nikkei 225 would be a good option? Apparently it's traded quite heavily during the Euro session.
I'm wanting to open a minimum account with AMP and pay for a CQG data feed so I can start sim trading the most appropriate futures market for me - I just need to figure out exactly which one that is!
Thanks again
Edit: Apologies, I've just realised you said "mDAX", which is in fact the mini DAX! Still keen for your thoughts on the mini Nikkei 225, though.
Mini Nikkei would be a great market to trade BUT the minimum tick size is 5 point(expensive)...eg ..mDax is 1.0, Bunds 0.01, HSI 1 etc........Josh knows all about the Nikkei as he trades it daily just have a look at his earlier posts. I've never bothered with it due to the tick size.
You can use tic based charts to trade the exact same patterns that you would normally use on your time-based charts - by essentially changing the number of tics per bar....for the ES many believe a 2000tic chart is the equivalent of a 5min chart......food for thought. Trading is such a personal journey only use what you believe in.
